When it comes to financing for your small business, the SBA is often the best resource you can find. Not only do the loans from its flagship programs provide you with advantageous rates and easier approval requirements than traditional bank loans, but they also have other features designed to help you succeed. One of the most important investment tools for new business owners is the 504 loan program. This SBA loan package is designed to finance multiple asset purchases at once, allowing you to purchase a building for your operation and the machines needed to get it up and running, all from a single pool of capital.
Collateral for Multi-Asset Loans
If you take out an equipment loan for a single asset, that asset is typically used as collateral for the loan. With a down payment to account for marketplace depreciation, this gives the lender a fair chance to recoup a debt if the borrower defaults. The SBA guarantees a portion of the loan value to lower risks further when you use an approved program, and when you use the 504 programs, all of the assets you purchase are used as collateral together.
That means you need to include full documentation of each piece of collateral in an SBA loan application to get approved, too. If you leave out anything, you might find your application delayed or even denied. In that case, you would need to make corrections and start over, so it’s worth getting right the first time out.
Apply With Preferred Lenders
There are two reasons why it might take a while to get loan approval for these loans. The first is because of delays while the SBA independently approves loans. The second is because this process makes it difficult to speed things up by applying with multiple lenders. That is where preferred lenders become important.
Preferred lenders can approve their own SBA loan packages independently. That means you do not have the additional wait time imposed by the SBA. It also means there is no drawback to applying with multiple lenders at once, then taking the first approval you get. The result is that you can use the preferred lender system to significantly speed up response times while increasing your odds of getting at least one approval. That is a vital part of making the most of this important small business loan program, since the faster you get financing, the faster you can get to work.